Confidentiality Clauses and Privilege: A Delicate Balance

by Bennett Jones LLP

Parties to a mediation have a wide latitude to contractually shape the extent of confidentiality that applies, and even may exclude exceptions to settlement privilege, the Supreme Court of Canada recently held in Union Carbide Canada Inc v Bombardier Inc, 2014 SCC 35 [Union Carbide].

In Union Carbide, the parties to a private mediation signed the mediator’s standard-form mediation agreement containing a confidentiality clause. That clause established a blanket ban on alleging, referring to or putting into evidence in any proceeding anything that transpired in the mediation. After the mediation, the parties disagreed on whether they had reached a deal, and, if they had, what the terms were. Did the confidentiality clause really prevent the party who thought it had an agreement from referencing what happened at mediation to make its case?

Answering this question required the Supreme Court to address the interaction between confidentiality clauses and the common law evidentiary rule known as “settlement privilege”, which also protects the confidentiality of settlement discussions.

Settlement privilege, also known as the “without prejudice” rule, protects communications exchanged by parties in the process of trying to settle litigation from being disclosed without the consent of the parties. It applies even if no statute or contract assures confidentiality. But one of the limited exceptions to settlement privilege is that a communication “that has led to a settlement will cease to be privileged if disclosing it is necessary in order to prove the existence or the scope of the settlement” (para 35).

The potential for the scope of a contractual confidentiality clause to differ from that of settlement privilege required the Supreme Court to consider, first, whether parties could agree under any circumstances to oust the settlement exception to settlement privilege, and, second, whether the parties in this specific case had done so.

The Supreme Court held that parties are free to agree to confidentiality clauses that differ from the ordinary scope of settlement privilege, even to the extent of barring themselves from having recourse to communications made in the course of mediation to prove the fact of a settlement agreement or its terms. The “will of the parties” in this regard should “presumptively be upheld absent such concerns as fraud or illegality” (para 49).

However, it will not be presumed that a confidentiality clause in a mediation agreement “automatically displaces settlement privilege, and more specifically the exceptions to that privilege that exist at common law” (at para 3). Where parties have agreed to greater confidentiality “in order to foster frank communications and thereby promote a settlement”, it cannot be presumed that they also intended to “displace an exception to settlement privilege that serves the same purpose” (para 54). A specific contract might effect this result, but it would have to be clear in its expression of this intent (ibid). Absent an express provision to the contrary, it may be “unreasonable to assume that parties who have agreed to mediation for the purpose of reaching a settlement would renounce their right to prove the terms of the settlement” (para 65).

Whether in any given case the parties intended to displace settlement privilege falls to be determined in accordance with the applicable principles of contractual interpretation. As Union Carbide arose in Québec, the Supreme Court applied that province’s law of contractual interpretation. In the result, the Court held that the parties had not intended to sign away the potential to prove that they had reached a settlement. They had entered their mediation contract with the express purpose of trying to reach settlement, and it was a standard-form contract provided by the mediator that they both signed without modification.

Union Carbide confirms that parties to mediation have wide latitude to shape the extent of confidentiality that applies to mediation, and even to oust the exceptions to settlement privilege entirely if they wish.The case further confirms that the strong public policy of giving parties every opportunity to resolve their dispute prior to commencing, or before continuing, litigation is furthered by permitting parties to customize the terms on which they mediate.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Bennett Jones LLP | Attorney Advertising

Written by:

Bennett Jones LLP

Bennett Jones LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.